WHY PRESIDENT BUSH SHOULD LOVE THOSE EUROPEANS

While the pesky French and Germans angered President Bush over the invasion of Iraq, they surely saved his remaining political bacon on energy costs. Without the French, Germans, Italians, Austrians, Belgians and everyone else in Europe, we would be paying over $5 for a gallon of gasoline right now.

You see, European governments have long run their finances on gasoline, taxing the hell out of gas and forcing their drivers to pay $4 per gallon while we Americans were tooling about at less than $2 a gallon. This forced Europe's drivers to move down to small vehicles. Very small vehicles. Go to London where the Mini looks like a maxi.

The results in Europe have been dramatic.

On a dollar-for-dollar basis, Europe's economy requires only half the energy used by the U.S. economy.

Now here's the kicker:

If Europe had taxed fuels just as laxly as the U.S. does, the Continent's gas would be just as cheap as it in the U.S. This means that the drivers in Europe would trade in their tiny cars and buy big SUVs. This would drive up gasoline demand in Europe and knock the world's crude oil supply and demand curve totally out of whack. World oil prices would shoot up from $57 a barrel to well over $100. And that means gas prices well over $5 a gallon. Probably over $6 a gallon.

Furthermore, elevated crude oil prices would drag up natural gas and coal prices. The costs of heating your home, using your utilities and buying all things made from hydrocarbons would blow through roof.

The result would be big-time inflation and rapidly escalating interest rates, plunging the U.S. economy into a Carter-style stagflation with the accompanying "malaise."

Alan Greenspan has been amply applauded for his performance as chief of the Federal Reserve. But could he have done as well without the considerable help he received from French President Chirac and then-President Schroeder of Germany?

Without Chirac and Schroeder, we probably could not have had the housing boom which produced over 50 percent of our growth in recent years.

Instead of lambasting the oil industry, a reasonably intelligent U.S. Senate and Congress should be looking at the Euro model for energy conservation.

Following the Europeans, we would we all get into smaller cars, and large parts of our truck freight would shift to the railroads, which are over 20 times more energy efficient than trucks. And when the heating bills for the megamansions started coming in, we would see a strong reversal in the rising size of homes under construction.

Within a few years, we would see the development of excess refinery capacity, a situation which now exists in Europe. This would further reduce the supply and demand pressure on gasoline. The huge profits of the big oil companies would begin to melt away.

Lastly, we would sharply reduce our oil imports, dramatically improving our dismal trade balances. In the process, we would financially undermine our Arab antagonists, drying up funding for terrorism.

Nothing but good would result from our adopting the successful Euro fuel model.

Will Congress do this? Will President Bush show this kind of leadership?

No. It is politically more beneficial to ape "the Jerry Springer of the U.S. Senate," New York's Chuck Schumer, who loves to scream and yell at the oil industry while threatening big taxes. (The Senator has found that it is easier to get on TV if you are much more irrational than rational).

The bottom line:

Oil industry profits are not the cause of our energy problems.

They are the result of our problems.